Wealth Management Update – March 2022 | Proskauer Rose LLP – JDSupra – JD Supra

Proskauer Rose LLP
The March Section 7520 rate for use with estate planning techniques such as CRTs, CLTs, QPRTs and GRATs is 2.0%, a significant increase from the February rate of 1.6%.
The March applicable federal rates (“AFR”) for use with a sale to a defective grantor trust or intra-family loan with a note having a duration of:
While still low, the Section 7520 rate and AFRs have been rising with inflation. Clients contemplating any type of transaction whose success depends on these “hurdle rates” may wish to proceed sooner rather than later. To review a commonly used example, if a 9-year loan is made to a child, and the child can invest the funds and obtain a return in excess of 1.74%, the child will be able to keep any returns over 1.74%. Just last month, that rate was only 1.4% and it would not be surprising to see further rate increases in the coming months.
Media reports about the estate of legendary Broadway composer Stephen Sondheim serve as a reminder that in New York, while Revocable Trusts help protect the privacy of a decedent’s estate plan by keeping the full plan details out of public view, the probate petition still includes the identities of the various trustees and beneficiaries. While the specific terms, conditions and amounts of any gifts will remain private, the identities of the beneficiaries and nominated fiduciaries may not.
The statutory residence test, which applies to individuals who are not domiciled in New York State, provides that if an individual spends 184 days or more of the year in New York State and maintains a permanent place of abode “for substantially all of the taxable year,” such individual is treated as a New York resident for state income tax purposes. The term “domicile” generally means a person’s “permanent and primary residence that they intend to return to and/or remain in after being away (for example, on vacation, business assignments, educational leave, or military assignment).”
Prior to the tax year 2022, the term “for substantially all of the taxable year,” was intended by New York State to mean a period exceeding 11 months. Beginning with tax year 2022, the term “substantially all of the year” shall mean a period exceeding 10 months (instead of 11 months). This subtle change should serve as a reminder to geographically mobile taxpayers to be mindful of both their ties and time spent in
New York.
On December 22, 2021, New York Governor Kathy Hochul signed Senate Bill S1780C which will reintroduce remote notarization to New York upon its effective date. An expanded version of the law (amending the original) was signed by Governor Hochul on February 24, 2022. The new law, which takes effect in full as of January 31, 2023, has significant limitations and requirements on the use of remote notarization, including:
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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